OCEAN CITY — Resort residents can expect a water usage rate increase over the next five years, but the modest hike will offset the cost of major infrastructure improvements.
The Mayor and Council this week got a review of the town’s five-year comprehensive water and wastewater rate study prepared and presented by consultant NewGen Strategies and Solutions. The report is weighty and rife with technical complexities, but in layman’s terms, the town continues to invest in its water infrastructure with an estimated $60 million in improvements over the next six years, including the development of a new water treatment plant off 66th Street.
The water and wastewater systems are enterprise funds, meaning they are largely paid for by the consumer through various fees. As such, with $60 million in improvements in the offing over the next five years, the consultant is recommending a modest water rate increase of around 3%. The proposed increase will add about $7 to the consumer’s quarterly water bill, or take it roughly from an average of $93 per quarter to about $100 per quarter.
NewGen executive consultant Eric Callochia explained the town’s policy for funding water and sewer capital projects and said the current five-year study does not recommend any increase in the existing sewer rates. He also pointed out Ocean City water rates have not increased in five years.
“If the rates are not adjusted, clearly the existing water rates are not sufficient to fund the future water system debt service,” he said. “You want to spread the increase for future debt service over the next five years. We’re not recommending any increase in the sewer rates at this time.”
NewGen President Ed Donahue said Ocean City’s careful planning with water and wastewater infrastructure has insulated resort residents from exorbitant increases seen in neighboring communities.
“Ocean City has always been fiscally conservative with water and wastewater,” he said. “That’s why you’re in such a favorable position. You’re in a comfortable position now. With the modest increase, you can comfortably pay for $60 million in improvements over the next five years.”
Councilman Dennis Dare pointed out the relatively low cost of water service, despite the proposed increase.
“Our residents can get 1,000 gallons of water for $4.20, but can’t get two gallons of gasoline for the same price,” Dare said.
The council voted 7-0 to endorse the recommendations, draft an ordinance spelling out the proposed rate changes and schedule the requisite public hearings.